Thursday, November 28, 2013

Deutsche Bank describes Britain as “two nations” –
an island of wealth within the M25 and a hinterland of poverty everywhere else.

This is the latest in a long line of
pronouncements. The London Standard recently described London as “a world class
city state attached to an Eastern European economy”.

Much of this is London-centric provincialism of the
worst sort but, in so far as it’s true, it’s because the Great Wen is the seat
of power and Londoners are so blind to life north of Watford they keep all the
wealth and jobs for themselves.

Oliver
Harvey, a Deutsche Bank economist, says economic output per person employed in
London is roughly double the UK average; from 1997-2008 the difference in gross
value added per person between London and the rest of the UK exploded from
£10,000 to £18,000 and has remained roughly constant since then.

The biggest
change, apparently, is that London is increasingly detached from the fortunes
of the old industrial heartlands. The evidence also suggests that not only does
London suffer less from recessions than the rest of the UK, it now tends to
bounce back more quickly.

I'm not sure it's as bad as it appears.
There are several reasons for this including the question of how you define
London and, for that matter, a London business.

If KPMG does work in Germany, is
the revenue generated allocated to London specifically or the UK in general?
The answer is London because the Head Office is there but it is debatable if it
should be credited to the London GVA account.

The fact is that London and the
provinces are interdependent and it is misleading to suggest one could prosper
without the other.

More to the point, London may be
doing well but much of its personal wealth is built on a wholly artificial
house-price spiral which will one day kick people in the teeth (maybe when the
Russians go broke); it's living costs are therefore exorbitant forcing up pay
rates but resulting in lower standards of living; it is heavily dependent on
migrant labour at exploitative, rock-bottom pay rates which create a downward
spiral of poverty amid all this prosperity; and as the seat of Government, the
centre for the media and the location of head offices, it is guilty of a
self-congratulatory, self-justifying financial conspiracy against the rest of
the country (no wonder the Scots want to escape).

The answer is devolution of
power, closure of most Government offices in London and their move to the
provinces, no matter how much the civil servants kick and scream as did the BBC
luvvies forced to move to Manchester.

An example of the State bias
towards London can be seen in the recent debate about arts funding. You will
find London gets a vastly excessive subsidy at the expense of the provinces
largely because the decision-makers prefer to go to the Opera in London than in
Buxton.

The truth is that London-centric
policies are denying the rest of the country an opportunity to compete.

A CBI study a few years ago showed State
spending on rail transport in London was ten times per head the rate of
spending in the provinces.

This simply reinforces the disparity between
the capital and the rest, helping to create the vicious circle where it is
perceived that the best facilities are in London and therefore sucking into the
city all the talented people who would be happier, wealthier and wiser if they
stayed well away from the M25.

We may be doomed to get HS2 but that is
almost entirely for London's benefit – rich Londoners will be able to pay royal
visits to Birmingham, Manchester and Leeds and still be back home in time to
see the latest subsidised play at the laughably-named "national"
theatre in London.

HS2 will also benefit London by spreading
the commuter belt even further, allowing more poor saps to travel daily to the
capital from the provinces to get to work.

It will suck more life out of reasonably prosperous
cities like Birmingham but the CBI, city council etc short-sightedly think HS2
is a good idea because they would like the building work, the repair shops etc
that it will bring.

Meanwhile the line is to arrive into Euston,
that monstrous sixties carbuncle which is already jam-packed, instead of to St Pancras
where you could easily change trains for Eurostar.

There is still no direct rail connection
between the provinces and the Channel Tunnel even though we were promised such
a thing long before the route was opened. Why is it assumed that provincials
have no business heading to France or Belgium (and vice-versa)?

Meanwhile look at the scandal over a new
"London airport". No doubt it will end up at Heathrow or, if not, at
Boris Island.

Why is there any need for another London
airport at all when the regional airports (Manchester, Birmingham, East Midlands,
even Luton) could be expanded to deal with any genuine capacity demand
perfectly easily?

This would spread prosperity around the
country, it would be cheaper to achieve and less disruptive for Londoners. Yet
the attitude seems to be – as always – that if it isn't in London it doesn't
really exist.

London is guilty of creating a brain drain
from the provinces as a result of this vicious circle. All major investment is
London-centric (hell, even the blasted Olympics went to London; when Birmingham
bid for them a few years ago, nobody outside the region had a good word to
say for it – why? For that matter, why is the national football stadium in London?).

All this investment in London encourages
businesses to headquarter there. That sucks in talented people. That, in turn,
requires more state investment and so it goes on.

The regions' death spiral has to be broken
but that would cost London money, jobs etc and as all the decision-makers are
in London, it will never happen. Look at how little money Michael Heseltine has
managed to wring out of the treasury for the Local Enterprise Partnerships as
an example of the way London dominates and refuses to release any of the reins
of power.

There is a chance that in the near future
the Palace of Westminster will have to close for refurbishment and MPs will be
obliged to meet elsewhere. It would be instructive to force them to meet in the
provinces, away from London, and take the civil service with them. If that
happened, you would suddenly see a boost in state spending in the area chosen
as the seat of parliament because suddenly the people in power would be forced
to look at the world from a different perspective.

The poverty in many old towns and cities,
the joblessness, the lack of economic growth and the drain on the State that
this represents (through benefits etc) are almost entirely due to the
London-centric attitude of too many influential people in this country (petty
London provincialism, even among exiled Scots, Brummies, Scousers etc).

A balanced economy requires a balanced
attitude to London but that would require a massive withdrawal of public
investment in the capital. This would be politically unacceptable in London
because the place is so crowded already the voters would not put up with it.

Yet it is all an illusion: the City creates
money out of thin air and, when it disappears, the provincial taxpayer has to
bail out the banks while Londoners continue to receive their eye-watering
bonuses while house prices are utterly absurd because London is now the
money-laundering capital of the world, welcoming Russian crooks with suitcases
full of cash stolen from a country which is in irreversible financial decline.

Pay rates may be lower in the
provinces but if you judged the question by standard of living and one of
Dave's happiness indexes, I suspect you would find a different answer.

Friday, November 08, 2013

Do the BBC and the CBI
seriously think free trade between Britain and the European Union would cease
if this country withdrew from the super-state?

This week Britain’s bosses’
organisation has been issuing dire warnings about the (completely invented)
number of jobs that would disappear if we voted to leave the EU.Then the BBC treated us to
the not-unreasonable comments of Nissan boss Carlos Ghosn saying the company would have
to “reconsider” its investments in Britain if we left the EU.All
he said was: "If anything has to change, we [would]
need to reconsider our strategy and our investments for the future."Of course they would.That does not mean they would close down,
shut up shop and move to Hungary as the BBC implies.What Mr Ghosn and any other sensible industrialist would need to
know is that Britain’s trade links with Europe were unharmed.They may discover
they have been improved, which would, we must assume, lead to a reconsideration
leading to extra investment not less.What the propagandists for the EU are trying to do – and not
without success – is terrify us into believing that withdrawal would lead to
the shut-down of UK plc as a trading nation.It’s complete nonsense.This country runs an estimated £70 billion-a-year trade deficit
with the EU (and a £13 billion surplus with the rest of the world). That means
we import from other European countries a whole lot more than we sell to them.There is absolutely no chance that they would seek to impose
some sort of trade barriers on the UK when they would have more to lose than we
would.Withdrawal from the EU does not mean an end to free trade.
Nobody in their right mind wants that. If some sort of trade war were to
ensure, the EU would be the biggest loser. So it’s just not going to happen.The CBI, the BBC and all the other outlets for Brussels
propaganda really should acknowledge this as a fact rather than trying to frighten
people into submission.

The man
who should be most relieved the Grangemouth dispute has ended reasonably
happily is the MP who was responsible for the whole fiasco – Tom Watson.

In the game
of chicken between Unite and Ineos over the future of Grangemouth petrochemical
plant, the trade union blinked first.

It’s
caved in and the plant will stay open, preserving 800 jobs (for the time being
at least).

What
seems to have escaped notice is that the roots of all the trouble were not so
much industrial as political – and at the centre of it all is Tom Watson,
Labour MP for West Bromwich East.

Grangemouth
is in the Falkirk Parliamentary constituency. Mr Watson was at the centre of
Unite’s attempt to fix the process for the selection of a new Labour candidate
for the seat in advance of the 2015 General Election.

In his
capacity as the Labour Party’s General Election co-ordinator, Mr Watson was
trying to engineer the selection of Karie Murphy.

Ms
Murphy worked for Mr Watson.

Not
only that but she is friends with, and he is a former flat-mate of, Len
McCluskey, General Secretary of Unite.

Things
fell apart when Ed Miliband, the Labour leader, complained of Mr McCluskey: “Instead of defending what
happened in Falkirk, Len McCluskey should be facing up to his responsibilities.
He should not be defending the machine politics involving bad practice
and malpractice that went on there, he should be facing up to it.”

Mr Watson quit as Labour
election supremo and Ms Murphy stood down as a potential candidate even though
a subsequent internal inquiry cleared her of wrong-doing.

What has all this to do
with Grangemouth? The answer is that the chairman of the Falkirk constituency
party at the time of the scandal was Stevie Deans.

Mr Deans was also the
Unite convener at Grangemouth. He was accused of signing up Unite members at
Grangemouth to the local Falkirk Labour Party to secure Ms Murphy’s selection.

He may have been cleared
by the Labour Party’s internal inquiry but Ineos mounted its own investigation
into his “alleged inappropriate use of company resources”.

The union reacted with
fury, called a strike ballot which won 80 per cent support and the row
escalated into a bosses-versus-unions conflict which led to the announcement of
Grangemouth’s closure.

The union’s action was
described as “the stupidest of strikes for the most idiotic of reasons” by Eric
Joyce, the sitting MP for Falkirk who is quitting at the next election after
attacking three MPs during a drunken brawl.

Mr Watson has been vocal
in his condemnation of Ineos and its boss Jim Ratcliffe, who he described as "billionaire hedge-fund
manager [who] was on his yacht in the Mediterranean" at the time, conducting
talks via intermediaries.

"Tax avoidance disguises the
profitability of this site," Mr Watson added, calling on the government to
take action.

He has also
said: “Too often it feels like it’s always the little guys that get steamrolled
by powerful corporates. Even as an MP I feel powerless to act.”

And he
complains that, in disputes such as this, “the little guy always loses”.

The truth is, though, that if Mr Watson had not tried
to fix the Falkirk selection process in favour of his, and his union’s,
favoured candidate, it’s quite likely none of this would have happened.

If he had allowed plain, ordinary, decent democracy to
run its course, who knows, his chum Ms Murphy might have got the job anyway?

Sadly for Mr Watson, as a conspirator his record is
not impressive. He it was who led the failed 2006 “curry-house coup” plotted in
Wolverhampton and aimed at replacing Prime Minister Tony Blair with Gordon
Brown.

It didn’t go according to plan, won no support and
cost Mr Watson his job – until a grateful Mr Brown later became PM and rewarded
his party disloyalty with a job as a Cabinet Office Minister.

These days the fat blogger – Mr Watson is 18 stone and
keen on issuing propaganda via the internet – regards himself as the scourge of
the media after he cross-questioned News International boss Rupert Murdoch.

He is one of those wanting to impose state control of
the press. No doubt if and when he succeeds in this aim he will silence anyone
who suggests that his serial chicanery is not quite as noble and altruistic as
the likes to think it is.

At one point in his Commons interrogation of Mr
Murdoch, he accused the publisher of being like a Mafia boss. To which we can
only conclude: It takes one to know one.